Cryptocurrencies
Cryptocurrency: Growth Trends & Industry Performance
Cryptocurrency markets have continued
to grow in size and popularity over the past few years, leading some investors to speculate. That they are on their way to becoming a mainstream asset class, and others insist they already are.
The infrastructure bill currently, before Congress certainly is a step in that direction, as it contains a provision specifically, addressing cryptosmarty.com But this same provision could threaten this burgeoning. The market for crypto by enforcing stricter, reporting requirements and other burdens required of securities. Registered with the Securities and Exchange Commission (SEC).
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These digital tokens, unlike any other asset class, have no one governing body overseeing them. Nor do they have a centralized, regulated exchange where people can trade these unregistered securities.
This might change soon enough if legislation before Congress passes and future decisions change this nebulous treatment.
Let’s explore the infrastructure bill’s nod toward eventually setting up the SEC as a crypto regulator.
That’s a trick question, in a sense, because they really aren’t – at least not in a straightforward way. As Daniel Goldman, co-founder of Unbanked puts it:
“The regulatory expectations for cryptocurrencies are a bit blurred.
Different regulators claim to regulate it; the SEC uses a Supreme Court ruling from 1946 (SEC vs. Howey) to determine what does and does not qualify as a security. The [Commodity Futures Trading Commission] has said cryptocurrencies should be regulated more like a commodity. The IRS taxes it as property, and an advisor at Fin CEN recently called crypto ‘just another means of payment.’“
Takin this first step toward better reporting and transparency could be the first of many ahead for the cryptocurrency asset class. Sentiment about regulation on crypto appears mixed, with some reasoning that would erode the core value proposition of cryptocurrency in the first place: a decentralized, transparent and anonymous store of value and unit of account that largely protects people from fraud and criminal activities.
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On the last two points, there’s still room for improvement, to be sure.
However, to allow crypto to flourish and fulfill the potential its biggest proponents advocate, Gouldman offers advice to the U.S. government.
“[The government] needs to build a regulatory framework that properly balances the responsibilities around tax obligations, anti-money laundering concerns and fraudulent behavior with innovation, entrepreneurship and consumer privacy and rights,” he says.
With these tenets in mind,
the infrastructure bill awaiting approval in Congress could have huge implications for how these digital tokens are treated by federal regulators and the public at large going forward.
The question of whether these unregulated securities should be regulated is quickly becoming moot as many see it as an inevitability with the size and scale of the asset class. Instead, lawmakers would do well to recognize their mere consideration of including crypto provisions in this bill indicates that crypto is here to stay.
As such,
they’d be wise to be careful and precise about how they handle this burgeoning asset class and its potential.
